U.S. Stocks Take Opening Hit After Earnings Disappoint

NEW YORK (MarketWatch) -- U.S. stocks on Tuesday opened lower after Alcoa Inc.'s earnings fell short of forecasts and Advanced Micro Devices Inc. projected revenue under what it had anticipated and said it would cut its workforce 10%.

The Dow Jones Industrial Average fell 78.73 points to 1,2533.70.

Of the Dow's 30 components, all but four were lower, with aluminum manufacturer Alcoa among the blue chips on the decline, its stock off 1.2%. After Monday's close, Alcoa reported a first-quarter profit drop of more than 50%. .

"U.S. equities were tarnished by the first round of first-quarter earnings results," wrote analysts at Action Economics.

The S&P 500 dropped 9.48 points to 1,363.06, while the technology-heavy Nasdaq Composite shed 19.57 points to 2,345.26.

Weighting on the tech sector, chip maker Advanced Micro Devices on late Monday said it plans to trim its workforce by 10% .

Shares of AMD were off 3.2%.

Apple Inc. shares dropped 1.5% after its downgrade to underperform from market perform by Morgan Keegan, which noted "mounting evidence of broad-based weakness in consumer technology spending in the U.S. and Europe."

Ahead of Tuesday's open, Washington Mutual Inc. projected a first-quarter loss of $1.1 billion, while entering deals to raise $7 billion.

Speculation that Washington Mutual would draw an investment of $5 billion helped U.S. stocks make modest gains on Monday.

Crude-oil futures edged lower, with crude for May delivery falling 5 cents to $109.04 a barrel on the New York Mercantile Exchange.

Gold futures also fell, with the front contract dipping $11.90 to $910.80 an ounce.

On deck Tuesday are pending-home sales figures for February, slated for release at 10 a.m. Eastern, as well as minutes from the last Federal Reserve rate-setting meeting, due out at 2 p.m.

"With the Fed in crisis-management mode, what happens next with the already-low funds rate is not important, said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. "The only information that would intrigue would be any ideas that the Fed indicates for crisis scenarios," said Crescenzi.

By Kate Gibson